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    How Samsung’s US$200 Billion Chip Deal Will Impact Broadcom (AVGO) Investors

    Simply Wall St·07/25/2026 12:21:50
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    • Earlier this week, South Korean officials said Samsung Electronics secured a more than US$200.00 billion, five‑year contract to manufacture Broadcom chips on its advanced 2‑nanometer and smaller process technologies, reinforcing both companies’ push into AI infrastructure hardware through 2030.
    • The scale and duration of this manufacturing deal give Broadcom greater access to cutting‑edge capacity outside Taiwan, potentially reshaping how it balances supply chain resilience with its ambitions in custom AI processors and networking chips.
    • Next, we’ll consider how this very large Samsung manufacturing pact could influence Broadcom’s AI‑driven investment narrative and risk profile.

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    Broadcom Investment Narrative Recap

    To own Broadcom today, you have to believe its custom AI chips and networking gear can stay central to hyperscalers’ data center buildouts while the VMware software business steadily deepens customer lock in. The Samsung foundry deal looks helpful for Broadcom’s key near term catalyst stronger AI hardware supply and customer wins by adding leading edge capacity outside Taiwan, but it also highlights a key risk if Broadcom’s few largest AI customers ever slow spending or shift designs.

    Among recent announcements, Standard Chartered’s decision to run 70% of its global infrastructure on VMware Cloud Foundation stands out. It shows how Broadcom’s software arm can complement the AI chip story by adding high margin, recurring revenues that are less tied to any single hyperscaler’s capex cycle, which matters if AI hardware demand ever pauses or competition in custom accelerators tightens.

    Yet behind the Samsung win, investors should be aware of how concentrated Broadcom’s AI revenue still is with a handful of hyperscale customers...

    Read the full narrative on Broadcom (it's free!)

    Broadcom's narrative projects $243.8 billion revenue and $120.9 billion earnings by 2029. This requires 47.8% yearly revenue growth and about a $91.6 billion earnings increase from $29.3 billion today.

    Uncover how Broadcom's forecasts yield a $523.73 fair value, a 37% upside to its current price.

    Exploring Other Perspectives

    AVGO 1-Year Stock Price Chart
    AVGO 1-Year Stock Price Chart

    Some of the most optimistic analysts already expected Broadcom revenue to climb toward US$326.5 billion with earnings near US$162 billion by 2029, so this Samsung pact could either reinforce their aggressive AI customer pipeline view or prompt a rethink if it heightens worries about hyperscaler dependence and future pricing power.

    Explore 22 other fair value estimates on Broadcom - why the stock might be worth as much as 70% more than the current price!

    Reach Your Own Conclusion

    Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.